Chatbot Market Size, Share & Trends Analysis Report By End-User (Large Enterprises, Medium Enterprises, Small Enterprises), By Business Model (Bot for Service, Bot for Social Media, Bot for Payments/Order Processing, Bot for Marketing, Others), By Type (Standalone, Web-Based, Messenger-Based/Third Party), By Product Landscape (Artificial Intelligence, Marketing, Human Intelligence), By Vertical (Healthcare, Retail, BFSI, Media and Entertainment, Travel and Tourism, E-commerce, Others) and By Region(North America, Europe, APAC, Middle East and Africa, LATAM) Forecasts, 2024-2032

Market Overview

The global chatbot market size was valued at USD 4.57 billion in 2023. It is expected to reach USD 29.66 billion in 2032, growing at a CAGR of 23.1% over the forecast period (2024-32). Businesses are leveraging chatbots to enhance customer interaction, providing immediate responses and 24/7 service. This increases customer satisfaction and engagement, leading to higher retention rates. As consumers grow accustomed to instant communication, the demand for chatbots in customer service and support roles is driving market growth significantly.

With less human intervention, a chatbot can improve and engage customer interactions. It eliminates the obstacles to customer service that can arise when demand exceeds resources. Instead of waiting on hold, customers can receive immediate responses to their inquiries. Customers' brand experiences can be enhanced by reducing service friction. Users in both business-to-consumer (B2C) and business-to-business (B2B) settings are increasingly utilizing chatbot virtual assistants to complete simple tasks. Adding chatbot assistants reduces overhead costs, better supports staff time, and enables organizations to provide customer service during off-hours.

It is anticipated that the chatbot industry will experience significant growth throughout the forecast period. This is due to the substantially reduced operating costs that enterprises will experience deploying chatbots. Enhancements to chatbot functionality brought about by developments in artificial intelligence and other machine learning methods are likely to be a primary factor propelling growth in the chatbot market.

Market Dynamics

Global Chatbot Market Drivers

Increasing Messaging Applications

Over-the-top (OTT) applications such as WhatsApp, Facebook Messenger, etc., are experiencing rapid expansion. People are more engaged with messaging applications than social networking sites, so this growth is anticipated. Future market demand for chatbots that integrate with these messaging applications is substantial. Application-to-person automated messages are expected to grow significantly, as they can automate the task with a click of a message to book hospital appointments, check flight status, place orders for eCommerce sites, and locate the best deals. As it provides immediate solutions, people will become more familiar with automated customer service than most companies’ email or IVR services. Future demand for Chatbots is anticipated to be driven by machine learning and artificial intelligence to improve chatbot technology.

Widescale Usage in E-Commerce and BFSI Industries

Increasing numbers of banking and financial institutions benefit from implementing chatbots. Chatbot implementation increases cross-selling activity and decreases customer service costs. The developed chatbot must be secure and provide a seamless user experience for the financial industry. The market for chatbots in the BFSI industry is propelled by advances in artificial intelligence and the exponential growth of messaging applications.

Customers in the e-commerce sector prefer to receive brand-specific real-time price updates while shopping. These organizations are increasingly adopting chatbots, which engage users and reduce shopping time. It enables eCommerce businesses to increase ROI by keeping operating costs low.

Global Chatbot Market Restraint

Availability of Free Chatbots

There are numerous free platforms for developing and deploying predefined Chatbots with specific rules. Some prominent platforms, such as ChattyPeople, MEOKAY, Botsify, etc., enable businesses to construct chatbots without coding. Therefore, small businesses that don't need to solve complex problems prefer deploying chatbots with specific rules over artificial intelligence and natural language processing-powered chatbots.

Despite the recent changes in technological advancements and the need to provide precise service, businesses continue to deploy machine-learned Chatbots to maintain customer engagement. The probability of losing a dissatisfied customer is 92%, making it a critical concern for businesses. Thus, most companies continue to favor sophisticated Chatbots that can meet customers' precise needs.

Global Chatbot Market Opportunities

Penetration of Payment Services

Chatbots utilize artificial intelligence (AI) to process human language and engage in conversation with humans. Many chatbots can be installed on messenger applications such as Facebook, Skype, Slack, and other social networking sites and services. The developers of chatbots can directly integrate payment gateways with an assistant, allowing them to use messaging platforms to provide payment services. One of the chatbot market's most prominent growth prospects is the ability to collect commissions from nominal fees.

Regional Analysis

Region-wise, the global chatbot market share has been segmented across North America, Europe, Asia-Pacific, South America, and the Middle East and Africa.

Preponderance of North America in the Global Market

North America will acquire the largest share of the market, growing at a CAGR of 25.2% by 2030. The growth prospects for the market can be due to factors such as reduction in operating costs, the enhancement of customer satisfaction, and the improvement of the operating efficiency of the enterprises. North America is home to the most significant number of chatbot startups and where most chatbot integrations have taken place. The market expansion is also primarily driven by well-established businesses and the aggressive deployment of chatbots in the healthcare, BFSI, and e-commerce sectors.

Asia-Pacific will acquire the second-largest share of the market, accounting for USD 970 million at a CAGR of 24% during the forecast period. The use of chatbots in the day-to-day operations of customer service is gaining popularity among a growing number of large businesses. Chatbots are being utilized in many high-volume customer service operations by various industries. The substantial growth prospects of chatbots in this region can be attributed to the tremendous benefits to enterprises, such as reductions in operating costs, improvements in customer satisfaction, and enhancements in operating efficiency.

Segmental Analysis

The global chatbot market share is segmented based on end-user, business model, type, product landscape, and vertical.

By end-user, the global chatbot market has been classified into Large, Medium, and Small Enterprises.

On Basis of End-User

Large Enterprises are expected to generate the highest market share, growing a CAGR of 23.8% during the forecast period. Several large businesses build their chatbots according to a predetermined set of guidelines. However, it is anticipated that large companies will optimize their chatbots shortly to achieve more sophisticated levels of operation. The majority of chatbot design tools are based on a model called machine learning. This model enables businesses to build an artificial intelligence application interface to deliver actionable business data.

In addition, the development of artificial intelligence in the market has resulted in a significant shift away from the use of online social networks and toward the use of messaging applications. Chatbots are typically developed on social media platforms and messaging applications like Facebook and Slack. However, there is a possibility that these companies, which have immense revenue potential, can use their platform for developing and distributing bots.

By business model, the global chatbot market has been classified into Bot for Service, Bot for Social Media, Bot for Payments/Order Processing, Bot for Marketing, and Others.

On Basis of Business Model

Bot for Services is anticipated to have the most significant market share during the forecast period, growing at a CAGR of 24.7%. The rising popularity of the internet and other forms of online service across the globe will increase the demand for bots that provide various services. The availability of numerous tools and platforms for service providers to use in the development and implementation of bot services, as well as an increase in bots’ usage in various industries, such as the banking, financial services, and insurance industries, are factors that are helping to accelerate the market expansion. The ability of the bots to solve a wide variety of problems has led to an increase in the demand for their services.

By type, the global chatbot market has been classified into Standalone, Web-Based, and Messenger-Based/Third Party.

On Basis of Type

Standalone is expected to hold the most commanding position in the market, growing at a CAGR of 24.4% by 2030. Consumers increasingly use standalone messaging platforms to interact with visual assistant applications such as Google Assistant, Amazon's Alexa, and Apple's Siri. It is anticipated that this will significantly increase the demand for independent chatbots.

By product landscape, the global chatbot market has been classified into Artificial Intelligence, Marketing, and Human Intelligence.

On Basis of Product Landscape

Marketing will acquire the maximum market share, growing at a CAGR of 23.7% during the forecast period. This is due to the growing preference of individuals for messaging applications over social networking websites. A sizeable increase in demand is anticipated in the foreseeable future for chatbots that are explicitly designed for incorporation into various messaging applications.

Additionally, chatbots will likely become more popular as businesses continue automating their sales and customer service processes. Implementing these bots enables businesses to provide services promptly while lowering operating expenses. Since chatbots allow for direct customer interaction, digital marketers extensively use them to keep existing customers informed about new products and services. Therefore, it is anticipated that the marketing sector will experience significant growth throughout the forecast period.

Artificial Intelligence is expected to be the fastest-growing segment during the forecast period. Due to the extensive investment made by market players in the artificial chatbots market, it is anticipated that chatbots powered by artificial intelligence will experience a high growth rate. These actions were taken to increase the number of customers who became the company's clients and broaden its customer base. Artificial intelligence is utilized by chatbots to process language and engage in conversation with humans.

By vertical, the global chatbot market has been classified into Healthcare, Retail, BFSI, Media and Entertainment, Travel and Tourism, E-commerce, and Others.

On Basis of Vertical

E-Commerce will command the largest share, growing at a CAGR of 25.4% during the forecast period. The companies are concentrating their efforts on automating sales and customer service; this will significantly reduce costs and is the primary focus of these businesses. Chatbots equipped with artificial intelligence are gaining a lot of popularity recently. Implementing chatbots in commercial settings will result in a sizeable reduction in labor expenses, the automation of a portion of customer service and sales, and significant cost savings for commercial settings. Customers would rather receive prompt responses from customer service than wait for responses over several days.

Using a chatbot to handle your responses can drastically reduce the likelihood of losing a customer. Customers generally prefer to receive information about real-time price updates about the brands they are shopping for while online shopping in the e-commerce sector. These companies are increasingly adopting chatbots, which engage the user and help reduce the overall amount of shopping time. E-commerce businesses can improve their return on investment (ROI) by reducing operating costs.

Impact of covid-19

COVID-19 had an unfavorable effect on the market development. Many businesses have been severely impacted by the outbreak, which has resulted in a global recession. This compels banks all across the globe to put initiatives into action. Numerous core banking, deposit accounting, and loan accounting systems are not intended for functional versatility. As a result, globally, banks and financial institutions emphasize business continuity planning. They are mainly responsible for ensuring that customer relations activities and branch distributions are not disrupted.

In many businesses, the outbreak substantially affected the working environment. Due to the constraints, many financial institutions and banks have been obliged to let their staff work from home. The finance system is dealing with late lease payments and rapid interest rate fluctuations, which has resulted in an enormous reconfiguration of the global financial system.

Market Recovery Timeline and its Challenges

The post-pandemic period will be significant for the global core banking software market. The market's growth is likely to be hampered due to privacy concerns, security of data, and skilled professionals working with advanced technologies. On the other hand, factors like the rising demand for cloud-based solutions from banking corporations and the growing demand for managing customer accounts from a single server will likely continue to drive the market growth over the forecast period. Overall, the recovery of the global core banking software will be quick.

Recent Developments

• July 2024 - JPMorgan recently launched an in-house AI chatbot capable of performing tasks typically handled by research analysts. This new AI tool is designed to assist in processing and analyzing data, ultimately providing more efficient and comprehensive research support.
• July 2024 - Elon Musk's platform X has introduced an option allowing users to prevent their data from being used to train AI chatbot Grok. This feature provides more control over personal data, addressing privacy concerns associated with AI development. Users can enable this setting to ensure their data is not utilized in AI training processes.